More San Diego Employees Are Quitting Since ‘Prop B’ Pension Reform

San Diego city employees are quitting their jobs in higher numbers and after fewer years of employment, since voters passed the city's landmark pension reform measure, Proposition B, in 2012.

The findings from a recent city auditor's report on human capital lent credence to arguments made by city employee unions that Proposition B carried a hidden cost to taxpayers. They said it has hurt San Diego's ability to hire and keep qualified workers.

From 2010 to 2012, the city was seeing just over 150 employees quit their jobs each year. After 2012, however, the number of quits began to rise, more than doubling by 2016 and reaching a high of about 388 last year. The report estimates that the higher turnover rate in 2017 cost the city roughly $39 million, spent mostly on recruiting replacements and new employee training and orientation.

Those who do quit their jobs at the city are also doing so more quickly after they were hired, the analysis found. In 2011, employees who quit their jobs had worked for the city on average just under 10 years. In 2017 that number had dropped to about five years.

The number of retirements of city workers has held steady since 2014, the analysis found. San Diego's overall turnover rate — comprising quits and retirements — did not appear to be an extreme outlier when compared to other cities in California.

Proposition B eliminated guaranteed pensions for all new city employees except sworn police officers, replacing them with 401(k)-style private retirement accounts. Voters passed the measure overwhelmingly after ballooning pension costs put the city on the verge of bankruptcy.

Photo credit: San Diego City Auditor's Office

A graph shows the number of San Diego city employees quitting versus retiring from 2010 to 2017.

The California Supreme Court ruled unanimously earlier this month that the city violated state labor laws when it placed the measure on the ballot without first negotiating with city employee unions. While Proposition B was technically a citizens initiative, the court ruled, the campaign had strong material support and guidance from then-Mayor Jerry Sanders. The justices returned the case to the 4th District Court of Appeal to determine how to rectify the city's mistake.

It is still unclear when the appeal court will take up the case. The City Attorney's Office last week asked the state Supreme Court to rehear the case, saying the justices failed to consider First Amendment arguments. The justices have given themselves until the end of October to decide whether to grant the city's request.

City employee unions have long argued that Proposition B has contributed to San Diego's recruitment and retention problems. Mike Zucchet, general manager of the city's largest public employee union, the Municipal Employees Association, said the data validated their argument.

"It's data that backs up what we've been seeing anecdotally for years now, which is it's been harder to recruit people and fill positions, and notably, and that's what this data focuses on, to retain them once they're at the city," he said.

Zucchet added that the city's recruitment and retention problems have been exacerbated by comparatively low salaries and a highly competitive job market. The region's unemployment rate in July was reported at 3.5 percent.

Supporters of Proposition B argue the measure will save taxpayers in the long run, as the risk of weathering the ups and downs of financial markets shifts from the city to the individual employee.